A Masterclass in Making Tax Digital Reply

Yesterday I presented a 2 hour Masterclass in Making Tax Digital at Scottish Public Sector Taxation Conference, we covered

  • What is MTD and Why is it being introduced
  • What will it cost
  • When are Digital Links needed
  • What are Digital Links
  • How is MTD going so far
  • Problem areas
  • Why has GIANT been delayed
  • What are the 2 main types of Bridging Software
  • Scenarios

160 delegates from the Scottish Government, Scottish Council, Scottish NHS and HMRC attended.

Property and Capital Gains Tax Relief – 2020 changes Reply

The Government love making changes to property tax, often in order to increase tax.

Legislation will be introduced in Finance Bill 2019-20 amending sections 222 to 224 TCGA. These changes will:

reduce the final period exemption from 18 months to 9 months (there are no changes to the 36 months that are available to disabled persons or those in a care home)

reform lettings relief so that it only applies in circumstances where the owner of the property is in shared-occupancy with a tenant

make some revisions to job related accommodation relief by extending it to serving members of the armed forces, who are required to live away from home and, instead of being provided with job-related accommodation, receive payments from the MOD under its Future Accommodation Model and uses those funds to pay for accommodation

legislate 2 ESC – D21 Late claims in dual residence cases and D49 Short delay in owner occupiers taking up residence

clarify the rules concerning the transfer of residential properties between spouses or civil partners – those rules will make clear that where an individual transfers all or part of an interest in a residential property that they own to their spouse or civil partner, the receiving spouse or civil partner will inherit the transferring spouse’s or civil partner’s previous history of use of that property, resulting in a fairer outcome

steve@bicknells.net

What is a C79 and how do you account for Import VAT? Reply

The Economic Operator Registration and Identification (EORI) scheme was implemented in the EU UK 1 July 2009. You will require an EORI number if you import from or export to countries outside of the EU.

Goods are declared to customs using form C88 Single Administrative Document (SAD) that in most cases is presented in an electronic format. Import VAT is dealt with in the same way as a Customs Duty. You can pay it outright at importation, or under the duty deferment arrangements explained in Notice 101: deferring duty, VAT and other charges which also covers Simplified Import VAT Accounting (SIVA). This is a scheme that reduces the level of financial security required to guarantee the payment of import VAT through the duty deferment system.

Subject to the normal rules, you can claim as input tax any import VAT you pay on goods, provided those goods are imported for the purpose of your business. Your claim must normally be made on the VAT Return for the accounting period during which the importation took place.

C79
The normal evidence of payment of import VAT is the import VAT certificate (form C79), which is issued monthly.

You need to hold official evidence of VAT paid on imported goods before you can recover the VAT as input tax.

The C79 certificate is issued in connection with most import procedures, and also post importation corrections and removals from a customs warehouse.

The certificate is made up of twin sided A4 sheets with a blue print background.

Flexible Accounting System (FAS) paid VAT transactions will be shown under your EORI number.

Neither the agent’s VAT number nor the agent’s reference number appears on the certificate for immediate payment and FAS paid transactions. If this causes you particular difficulties you may wish to consider arranging duty deferment facilities.

The accounting date will be shown against each item on the certificate, and transactions will appear on the certificate for the month covering that accounting date – for example, transactions bearing an accounting date of October will normally appear on the October C79 certificates. For transactions paid by duty deferment the accounting date is normally the date of clearance of the goods. For immediate payment and FAS items the accounting date may, in some instances, be later than the date of the declaration. So some goods cleared in late October may have a November accounting date, and will therefore appear on the November certificate.

Transactions that are the subject of an accounting query will appear on the first certificate issued after the query has been dealt with.
A single total of VAT for the period will appear at the end of the final page.

Certificates cover accounting transactions made in each calendar month should be received around the 24th of each month following imports logged the previous month.

Here are the instructions on how to enter C79 import VAT

The cost including the freight will have been paid to the freight company such as FEDEX

Sage One

https://help.sageone.com/en_uk/accounting/import-vat-and-duty.html

Xero

https://central.xero.com/s/article/Using-non-standard-tax-rates-UK

steve@bicknells.net

What is happening to the employment allowance in 2020? Reply

In April 2020, the government are planning to make changes to the employment allowance. Since 2014 many businesses have been able to claim £3,000  per year as a deduction against Class 1 NI, but from April things are changing!

Here is a quick summary

  1. Employers won’t automatically qualify for the EA (Employment Allowance) and must claim it each year. This will mean submitting a declaration confirming that you’ve checked and qualify by meeting the eligibility conditions.
  2. Employer with more than £100k of Class 1 NI won’t qualify
  3. Connected employers won’t qualify – sharing staff, premises or other resources
  4. EA will be counted as State Aid and the maximum state aid allowed is 200,000 euros

So even if items 2 to 4 don’t apply, item 1 will apply to every business wanting to make a claim.

steve@bicknells.net

A bit more Goodwill Tax Relief Reply

What has changed

You can now get relief on purchases made on or after 1 April 2019 if the:

  • goodwill and relevant assets are purchased when you buy a business with qualifying intellectual property (IP)
  • business is liable to Corporation Tax
  • relevant assets (including goodwill) are included in the company accounts

Find a full definition of goodwill and relevant assets on GOV.UK in the Corporate Intangibles Research and Development Manual CIRD44060.

Relief you can get

Relief is a fixed rate of 6.5% a year on the lower of the cost of the relevant asset or 6 times the cost of any qualifying IP assets in the business purchased.

Relief is given yearly until the limit is reached. More information about how to work out the relief can be found on GOV.UK in the Corporate Intangibles Research and Development Manual CIRD44093.

How to claim

You must complete a Company Tax Return and include the relief. This will reduce both:

  • your company or organisation’s taxable profit
  • the amount of Corporation Tax you have to pay

https://www.gov.uk/guidance/corporation-tax-relief-on-goodwill-and-relevant-assets

steve@bicknells.net